What happens if a guarantor breaches their guaranty to Sonesta Simply Suites?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN | SUMMARY |
|---|---|---|
| FRANCHISE AGREEMENT | reimbursing us for our purchase of insurance on your behalf; failing to obtain or maintain licenses required to operate your Hotel; we learn of any information involving you or your affiliates that we determine is likely to adversely reflect upon any gaming licenses or permits held by us or our affiliates, or our or their reputation; we reasonably determine that continued operation of your Hotel will result in imminent danger to public health or safety; you violate any law, ordinance, rule or regulation and fail to correct such violation within 72 hours after receiving notice from us or another party; or any guarantor breaches his or her guaranty or fails to provide adequate assurances to us (subject to state law). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 66–70)
What This Means (2025 FDD)
According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, if a guarantor breaches their guaranty, it constitutes a cause for termination of the franchise agreement. Specifically, it is listed as a non-curable default. This means that Sonesta Simply Suites does not have to provide an opportunity to correct the breach.
This provision is significant for prospective franchisees because many franchise agreements require a personal guaranty, especially for new franchisees or those with limited operating history. If the guarantor fails to meet their obligations under the guaranty, Sonesta Simply Suites has the right to terminate the franchise agreement, which would result in the franchisee losing their business.
It is important for potential franchisees and their guarantors to fully understand the terms of the guaranty and the potential consequences of a breach. Franchisees should carefully review the franchise agreement and guaranty with legal counsel to assess the risks and obligations involved. The franchisee should also ensure that the guarantor has the financial capacity to meet the obligations outlined in the guaranty.
While the FDD specifies that a breach of guaranty is grounds for termination, it does not detail the specific actions that constitute a breach. Therefore, prospective franchisees should seek clarification from Sonesta Simply Suites regarding what specific actions or failures would be considered a breach of the guaranty. Understanding these specifics is crucial for mitigating the risk of default and potential termination of the franchise agreement.